BT finalises sports JV with Warner Bros as FY profits rise 2%

UK telecoms and broadcasting group BT on Thursday confirmed it was moving its sports TV division into a 50-50 joint venture with Warner Bros Discovery as it also reported a small rise in adjusted annual core earnings.

The company posted adjusted earnings of £7.5bn, up 2% as revenue fell by 2% to £20.84bn, driven by lower sales in its enterprise and global businesses, although the firm benefited from a strong performance by its Openreach network business.

BT said it would transfer the operating businesses of BT Sport to the newly-merged US broadcaster which owns the Eurosport channel. The company in February said it was in exclusive negotiations with the US media giant after completing a lengthy review of its sport operation.

The deal will see the new entity offer sports such as football’s UEFA Champions League, the UK Premier League, Premiership Rugby, the Olympic Games, tennis grand slams and cycling’s Tour de France and Giro d'Italia.

The two companies said that the BT Sport and Eurosport brands would both initially continue to operate in the UK market “before being brought together under a single brand in the future”.

BT will also receive up to £540m based on performance of the operation over a period of four years, with an initial payment of £93m. This could pay out sooner if either the cap is hit, or Warner Bros Discovery triggers a call option to take full control.

The company said it would extend its cost savings target to £2.5bn by the end of 2025 from £2bn by 2024. Cost reductions have helped the company absorb some inflation pressures, it added.

Philip Jansen, BT chief executive, said price increases in phone, TV and broadband bills pushed through at the start of April had so resulted so far in customers cancelling services to save money.

“Churn is pretty much at record lows. One big part of what drives churn is value for money and pricing. Adding additional benefits and bundling of services for customers. It is working. We are not complacent, but what we are offering our customers is hitting our mark."

Russ Mould, investment director at AJ Bell said the results "were solid enough", noting that customers "seem to be sticking with BT despite the cost-of-living crisis and the company has made decent progress on the roll-out of 5G. The dividend is also in line with what was promised, and free cash flow is, critically, better than expected".

“BT still has plenty of issues to deal with, not least the complex and costly investment in broadband infrastructure and a big pension deficit, but at least it seems to be laying the platform to address these challenges.”